Corporate America Is Facing a Compensation Conundrum
Will businesses continue to raise wages to help employees cope with inflation or freeze wages as a recession looms? Either way, working-class households will be squeezed.
Tougher times are ahead for the working class.
Photographer: Scott Olson/Getty Images
The highest rates of inflation in 40 years and the response by central banks around the world to aggressively raise interest rates have created an unfamiliar double-edged sword for both businesses and households.
On one side of the blade you have employers with little experience taking inflation into account when determining compensation. With interest rates rising so fast and a recession in the cards, it might seem like common sense to freeze wages and cut overtime and part-time hours. Such a strategy would protect so-called core employees, or those who are full-time workers that have been with the company for an extended period and are least likely to quit in the near future.